History

While Arab traders were probably the first to visit the uninhabited Seychelles, the first recorded sighting of them took place in 1505, by the Portuguese. As a transit point for trading between Africa and Asia, they were occasionally used by pirates until the French began to take control of the islands starting in 1756, naming them after Jean Moreau de Sechelles, the then French finance minister.

The British contested control over the islands with the French between 1794 and 1811, with the British eventually gaining the upper hand and being ceded the islands in 1814. The Seychelles became a crown colony separate from Mauritius in 1903 and independence was granted in 1976, as a republic within the Commonwealth. The 1979 constitution declared a socialist one-party state, which lasted until 1992.

Politics
 
The Seychelles president, who is both head of state and head of government, is elected by popular vote for a five-year term of office. The previous president, France Albert René, was democratically elected after the constitutional reforms of 1992, though he had been in power since a coup d'état in 1977. He stood down in 2004 in favour of his vice-president, James Michel. The cabinet is presided over and appointed by the president, subject to the approval of a majority of the legislature.

The unicameral Seychellois parliament, the National Assembly or Assemblée Nationale, consists of 34 members, of whom 25 are elected directly by popular vote, while the remaining 9 seats are appointed proportionally according to the percentage of votes received by each party. All members serve five-year terms.

Politics is a topic of hot debate in the country - with many claiming there is a social and economic divide between the two leading parties and their supporters.

The Seychelles are part of the Indian Ocean Commission.

Economy

Since independence in 1976, per capita output has expanded to roughly seven times the old near-subsistence level. Growth has been led by the tourist sector, which employs about 30% of the labour force and provides more than 70% of hard currency earnings, and by tuna fishing. In recent years the government has encouraged foreign investment in order to upgrade hotels and other services.

At the same time, the government has moved to reduce the dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing. The vulnerability of the tourist sector was illustrated by the sharp drop in 1991-1992 due largely to the country's significantly overvalued exchange rate, the Gulf War and once again following the September 11, 2001 attacks on the U.S.. Other issues facing the government are the curbing of the budget deficit, including the containment of social welfare costs, and further privatisation of public enterprises. The government has a pervasive presence in economic activity, with public enterprises active in petroleum product distribution, insurance, banking, imports of basic products, telecommunications, and a wide range of other businesses.

Growth slowed in 1998–2001, due to sluggish tourist and tuna sectors. Also, tight controls on exchange rates and the scarcity of foreign exchange have impaired short-term economic prospects. The black market value of the Seychelles rupee is half the official exchange rate; without a devaluation of the currency the tourist sector should remain sluggish as tourists seek cheaper destinations such as nearby Comoros and Madagascar. A reduction in the number of flights serving the country, primarily due to the inability by airline companies to repatriate funds, has also constrained the growth of the tourism industry. The recent entry of Emirates and Qatar airlines has yet to result in increased growth.

At official exchange rates Seychelles remains the richest country in Africa in terms of GDP per capita. (US$7,504 as of 2005), although if the parallel exchange rate, or purchasing power parity rates, are used, it ranks behind Mauritius and Botswana. Because of economic contraction (the economy declined by about 2% in 2004 and 2005 and is set to decline by at least the same level in 2006) the country is moving downwards in terms of per capita income.

It is important to note that Seychelles is, per capita, the most highly indebted country in the world according to the World Bank, with total public debt around 122.8% of GDP. Approximately two thirds of this debt is owed domestically, with the balance due to multilaterals, bilaterals and commercial banks. The country is in arrears to most of its international creditors and has had to resort to pledged commercial debt to continue to be able to borrow. This high debt burden is a direct consequence of the overvalued exchange rate — in essence, the country is living beyond its means, and financing its lifestyle by borrowing domestically and internationally.

Demographics

As the islands of the Seychelles had no indigenous population, the current Seychellois are composed of immigrants, mostly of French, African, Indian, and Chinese descent. French and English are official languages along with a French-based Creole. Most Seychellois are Christians, mostly Catholics.